In Lehmann's terms: The rising cost of flour

QUESTION:

Why have flour prices been skyrocketing?

ANSWER:

To fully appreciate what is happening, we need to go back anumber of years, to when many people moved from rice-baseddiets to wheat-based diets. This change was enacted mostly dueto the tight supplies of rice and the abundance of wheat in theworld market. Everything went along smoothly until MotherNature began to stir the pot: Extreme drought in Australia;poor growing conditions, in general, in much of Latin America;and a combination of weather-related conditions leading tocrop failure and diminished harvest yields in the United Statesand part of Canada have all contributed toward reducing theworld inventory of wheat to something less than possibly twoweeks’ worth. Factor in yet another stirring spoon—this oneself-induced, the use of valuable wheat-producing acreage forethanol-producing crops—and you have a recipe for disaster.

Much of our country’s wheat, and a good deal of the wheat inCanada, is going to fill contracted international tenders for wheat;and, with so many countries out of the wheat export market, costis high and availability is tight. Many of the U.S. wheat millers arereporting that they should have enough wheat stock to get themthrough until the new wheat crop is harvested in June and July(for hard red winter wheat, used mostly for making bread-typeflours) and late July through August (for hard red spring wheat,most commonly used for making pizza flours). The success ofboth harvests is critical for shaping the overall wheat picturethis year. Due to the extreme shortage of winter wheat, manybakers have switched from winter wheat-based flour to springwheat-based flour, putting a further burden on the supplies ofspring wheat. It is speculated that wheat inventories will remaintight, regardless of the U.S. wheat harvest, due to the shortagein world wheat inventory, and that pricing won’t return back tonormal levels until the other wheat-exporting countries resumenormal exportation of wheat again. And here’s another thing toponder: With the looming recession, people don’t have as muchmoney to spend on food (not news to us), so they have turned tothe one food that they have historically turned to during timesof a poor economy: pasta. Pasta demand is way up; the lastprice I saw on durum wheat was $24 per bushel. To put this inperspective, our present high fl our prices are predated on wheatat $14 and change per bushel. How does this affect our wheat/flour price? Both hard red spring wheat and durum wheat aregrown in the same regions of the country; in fact, they are aninterchangeable crop. So, with spring wheat at $14 per bushel,and durum wheat at $24 per bushel, which one do you think thecash-strapped farmers will opt to plant in their fields next year?All of these unknown factors aren’t good for the wheat market,but there really isn’t much that can be done about it. This is aclassic example of how supply and demand, stirred vigorouslyby speculation, dictates the price of flour, and our flour millersor flour suppliers can’t do much about it, because they’re all inthe same boat.

My own take on the situation is that we’re going to have tocope with this situation for at least several years. If memoryserves me correctly, during and immediately after World War II,we had what was referred to as “wartime flour,” which was higherin extraction rate than regular white flour. For example, if youstart with 100 pounds of wheat and mill it to the standard 76%extraction, you end up getting 76 pounds of white flour, but ifyou mill the same wheat to a 78% or 80% extraction rate, you get78 or 80 pounds of flour. If we were to do this, the resulting flourwould be slightly darker in color, as it would contain more of thebran portion of the wheat, and the flour would probably be betterfor us, too, because it would contain more bran, or fiber, whichis recognized as healthy. Yes, the darker color of the flour wouldshow up in the finished crusts, but I don’t think the consumerwould readily recognize it due to the small portion of crumb area(the center section of the pizza crust) actually exposed on a sliceof pizza. Even thick-crust pizzas really don’t expose all that muchcrumb portion, and when you consider that a slice has sauce andcheese pulled down over the cut surface, it’s going to be hard tosee any difference in crumb color anyway. With all of the currentinterest in healthy eating and whole-grain crusts, maybe thiswould be a good time to talk to our flour millers to see if they canprovide us with a longer-extraction flour to help hold the line onprice, and to better utilize the inventory of wheat available formaking pizza flour.

For the immediate issue at hand, what can we do about risingflour prices? I don’t think we have any other option except topass the price increases on to the consumer. While the amountthat we pay for a bag or pallet of flour is quite significant, thedirect additional cost for a pizza really isn’t all that significant.

Look at it like this: To make a pound of dough, you need about10 ounces of fl our. If you’re paying $20 for a 50-pound bag, yourunit cost per pound of flour is $0.40. 10 ounces equals 0.625pounds, so 0.625 X $0.40 = flour cost for 1 pound of dough (inthis case, that would be 0.625 X $0.40 = $0.25). If you wantto find out how much fl our there is in a specific dough weight,such as a 12-ounce dough ball, simply divide the dough ball’sweight by the sum of the baker’s percent of your dough formuladivided by 100. For example, let’s say that the sum of your doughformula’s baker’s percent is 165; divide this by 100, and you get1.65. Now all you need to do is divide the dough ball weight (inthis case, 12 ounces) by 1.65, and you get 7.27 ounces of flour inyour 12-ounce dough ball. Then divide this by 16 to convert it to adecimal fraction of a pound (7.27 divided by 16 = 0.454 pound),and multiply the unit flour cost (cost per pound) by this numberto find the flour cost in that size/weight dough ball. Here’s themath: 0.454 X $0.40 = $0.1816 (about 18 cents) worth of flourin the 12-ounce dough ball. You can also use some great Excelspreadsheets for calculating your costs that will do the math foryou. In any case, you can easily find out exactly what the flourcost is, allowing you to pass that cost on to the consumer. I thinkour customers are faced with this reality often enough to acceptit in stride if we just take a few minutes to explain the priceincreases to them. Like a friend of mine always says, “It’s a heckof a way to do business, but it sure beats the alternative.”

Tom Lehmann is the director of bakery assistancefor the American Institute of Baking (AIB).
Need more dough advice? Visit the newDough Information Center at PMQ.com/dough.